"Should this combination come about we'll find ourselves on a completely different playing field," VDMA President Karl Haeusgen told journalists, adding the current situation was fuelling concerns among engineering firms and their customers.

The VDMA now expects production of machinery carrying the "Made in Germany" label to grow by 4% in 2022, down from 7% previously. Last year, production grew by 6.4%.

Haeusgen said the conflict would significantly hit Germany's engineering sector and intensify already existing supply chain problems.

Germany's engineering sector, which apart from numerous medium-sized firms also includes heavyweights such as Siemens and Thyssenkrupp, employs more than 1 million and is considered the backbone of Germany's economy.

Machinery is a substantial part of the 26.6 billion euros ($29.23 billion) in goods Germany exported to Russia last year.

Haeusgen said there was a real risk that a total of 7 billion euros in sales from exports to Russia, Ukraine and Belarus could largely disappear as part of the crisis.

($1 = 0.9100 euros)

(Reporting by Tom Kaeckenhoff and Christoph Steitz; Editing by Chizu Nomiyama)